China will launch a pilot project of medical insurance to cover 240 million urban residents outside the workforce this year, and all urban residents will become beneficiary of medical insurance by 2010, said a senior official with the Ministry of Labor and Social Security (MLSS) Wednesday.

The medical insurance project would cover those not included in the system for the urban employees, including school students, children and adults who are not employed, Hu Xiaoyi, vice minister of MLSS, said at a press conference.

Hu said the pilot project would be carried out in 79 cities, including large cities as well as county-level cities.

Beijing, Tianjin and Shanghai are not among the pilot cities, as similar practices have already been adopted in the three cities, according to Hu.

Hu said the local governments would fix the contribution rate for the insurance plan under guidelines from the central government based on the economic development level locally.

However, Hu said the contribution rate set at about two percent of the average per capita disposable income would be appropriate, and the Chinese government aimed to have the insurance project cover 50 to 60 percent of the total cost of those insured.

Experimental practices of establishing medical insurance for all urban residents have been implemented in some cities and towns of the east, west and central China earlier.

China established a medical insurance system for the urban employees in 1998, and a new cooperative medical care system in 2003 designed to cover all rural residents.